Credit Connect

The latest results Insolvency statistics from The Insolvency Service for Quarter July to September 2017 (Q3 2017) indicate that total individual insolvencies increased, driven primarily by an increase in individual voluntary arrangements, (IVAs) which reached a record high. Personal insolvencies rose 11% from Q2 to Q3 2017 and are 8% higher than this time last year.

Commenting on the figures Adrian Hyde, President of insolvency and restructuring trade body R3, said “Falling real wages and exhausted credit limits may have helped to push personal insolvencies up again. Aside from a couple of dips, notably in the previous quarter, there has been a pretty consistent upward trend in insolvencies since the middle of 2015. Some people have trouble paying for basics, like food or housing, let alone paying for luxuries. R3’s long-running survey of personal debt levels typically finds around two-in-five people saying they often or sometimes struggle to make it to payday.”

“It’s important, however, to approach the personal insolvency statistics with a touch of caution. Individual Voluntary Arrangements, which are often used to help resolve problem consumer debts, may be at a record high, but rises and falls in these numbers can be linked to changes in the market and access to IVAs rather than individual indebtedness. Not all of the increase can be put down to this, but it is something to bear in mind. Other procedures, like Debt Relief Orders, which are available to those with low levels of debt but low incomes and low levels of assets, have increased slightly. Bankruptcy numbers, already close to record lows, are stable.”

“It’s important to remember that the official insolvency statistics don’t tell the full story of how many people are struggling to repay their debts. Access to statutory debt solutions can be just as important a factor in driving the numbers up or down as improving or worsening finances. There may be thousands of people in non-statutory debt management plans, for example, sometimes because they can’t access a statutory solution which might be more appropriate to their situation. These plans are regulated by the Financial Conduct Authority but there is no information available about the extent of their use.”

“The most important thing for people in serious financial difficulty is to seek professional, independent advice to make sure they end up in a debt solution that is right for their particular situation. Government plans, announced earlier this week, to introduce a six-week ‘breathing space’ from creditor pressure will make it easier for people to get this advice and choose the right way to resolve their debts.”